⏫ Cocoa gains 5% ahead of key data

COCOA returns above $10,000 per tone ahead of key data

Cocoa jumps over 5% today and returns above $10,000 per ton mark. Price jump comes a day ahead of the release of key data from cocoa market. It should be noted that the jump comes after an almost 10% pullback yesterday. Investors have been trimming their long bets on cocoa in recent weeks amid uncertainty over key cocoa market data, that may trigger large price moves.

Data on cocoa manufacturing in Asia, Europe and America should be released tomorrow. ICCO expects that manufacturing will decline by around 5% this season compared to a year ago. On the other hand, a lot of market participants say that weakness in data may not necessarily mean weakness in demand, as manufacturing can be lower due to limited cocoa availability. Nevertheless, drop exceeding 5% may trigger a negative price reaction.

Apart from that, cocoa traders should also pay attention to reports from companies that produce chocolate. Such data was already presented by Barry Callebaut, which surprised positively with EBIT, but also hinted at a rather muted growth in the coming quarters amid high cocoa prices. Company signals that cocoa market deficit will reach 500 thousand tonnes, what would be deeper deficit than the one suggested by ICCO (300 thousand tonnes).

It should be noted that COCOA has been respecting range of the largest correction in the ongoing uptrend. In order to see a deeper decline, a break below $9,500 per ton would be needed. Should tomorrow's data surprise positively, price may jump and reach $11,000-11,600 area. On the other hand, a Swiss company manufacturing chocolate has been trading sideways since the beginning of a strong upward move on cocoa market. Source: xStation5